How to Use the RVM in a Pricing Discussion

By Reggie Nicolay on the RPR Blog

You’ve always known the importance of comps and market trends to setting pricing. But in today’s market, having an understanding of the lender’s requirements has become just as critical to a successful closing. Watch this short video to learn more about the RVM in pricing.

Hi Bob - Great question! Yes, the Realtors Valuation Model (RVM) is available via Realtors Property Resource. (www.narrpr.com). If you are not familiar with RPR yet, it's an online real estate database that's being rolled out to NAR'S REALTOR members to provide valuable datasets on every property in the US.

Currently RPR is being rolled out through local MLS. To see if your MLS is live yet, we have a map here: blog.narrpr.com/rpr-partners

It's also worth sharing the RPR blog, which has more background info: blog.narrpr.com

Reggie

by Richard Coake.com 2012-01-16 03:21:31

Are you saying that the mortgage lenders have clearly shown confidence in RVM? And that if a seller is determined to price unrealistically, we can show therefore warn him about the RVM for his property?

by Victor Lund 2012-01-16 12:11:55

Richard - Answering your question cannot be factual, but rather kind of fuzzy. Automated Valuation Modeling like the RVM is a mathematical means of computing a home's value. Really good AVMs will come within 5% of the accuracy of a property about 75% of the time; within 10% about 85% of the time, etc. Depending on where you are in the country results may vary.

First Tip. The accuracy of AVMs like the RVM on Luxury and Hyper luxury listings is typically less accurate.

Second Tip. Even if you get an offer on a home above the AVM value of a home, it may be difficult to get the offer accepted by the lender without a down payment that brings the loan amount below 20% of the AVM. The appraisal will help out with this a lot.

Third Tip. AVMs are used by banks in accepting short sale offers from buyers. If the offer is well below the AVM - it is unlikely to be accepted without a lot of effort from the buyer's agent to convince the bank that the AVM is over-stated.

Fourth Tip - It seems like AVMs are lower than the actual value of a home more often than they are higher (my impression - not a fact).